CEOs of digital music startups often strive for diplomacy when it comes to talking about the major powers that control most of the world's music. Not Paul Campbell.

"Simon Cowell is Satan, and the major labels have become antique dealers," says Campbell, a 53-year-old former BBC TV and radio producer turned entrepreneur. "We don't touch the labels and never shall. The key is to cut yourself free from the labels."

Which is exactly what Campbell has done with his company, Amazing Media, and it's why he's having such success.

Unless you're really into new music, or live in the U.K., where Amazing Media has created quite a stir for reasons I'll get into in a moment, you've probably never heard of Amazing Media. But the way Campbell is going, that's soon likely to change. His business has piqued the interest of big Silicon Valley venture capitalists; he's in talks with major consumer Web businesses to distribute Amazing music; and he's on track to launch a radio station in the U.S. in the coming months.

Campbell, in work mode.
Amazing Media

In fact, what began five years ago as a simple Web site to let unknown musicians upload and sell their music has grown into a burgeoning business unlike any of the others trying to take advantage of the chaotic music industry. Amazing Media also does something else that sets it apart from the likes of Pandora, Spotify, SoundCloud, and all the rest: it makes money.

Campbell, a professional drummer since he was a kid, began thinking about the opportunity in music back in 2005. Technology had made it supercheap to record and produce music, but it was still a monstrous challenge to get your music heard. It was an even bigger challenge to make any money from it.

He wanted to change that. Campbell assembled a small team and, working from the top floor of a Victorian building in Newcastle, England -- the home town of Sting and The Animals -- started building Amazingtunes.com, a site where musicians could upload and sell tracks and get paid 70 percent of the price.

That might sound like a bad deal for Campbell, certainly compared with the big labels, which typically pay musicians about 8 percent of the sale price. But his main goal was to build the catalog of music and win customers. Plus, musicians who used the site gave Amazing the rights to use their music for promotional purposes. "The idea was to be fair to the musicians," says Campbell. "And we deliberately gave margin away to attract users."

The site launched in 2007, and the first couple of years were slow going. This was pre-Twitter -- even pre-Facebook, to some degree -- and it took a while to amass much of an audience. Gradually, though, more and more musicians joined, and competitors emerged. Amazingtunes.com gained enough traction and buzz that in 2008, Richard Branson's Virgin Media tried to take over the business for an undisclosed amount. Campbell wouldn't sell.

Amazingtunes.com is similar to well-backed SoundCloud or BandCamp, sites that also let musicians push their music out across social networks and the Web. But Campbell takes things a step further. A few steps, actually.

In 2009, he launched a commercial-free, national radio station to play 100 percent new music, a strategy that anyone in the radio industry would have told him was crazy. Campbell did this as a promotional tool to drive people to Amazingtunes.com, which would supply all the music for the station. Amazing Radio, which broadcasts on Digital Audio Broadcasting (DAB) and via the Internet, effectively became a 24-7 marketing channel for Amazingtunes.com.

Campbell had no marketing budget for the station. Instead, he and his team took to the streets and got passersby to record promos. The station also had no DJs. It just played programmed tracks, like a jukebox.

The algorithms, along with the fans, did the work. The best songs on Amazingtunes.com -- as measured by how many people listened to, purchased, and liked them (in the Facebook sense) -- bubbled up and got featured on Amazing Radio. If no one played a song, it got ignored.

Next, Campbell beefed up the station by signing on some known musicians and DJs to host regular programs. The station fuels the Web site, where people purchase songs, and vice versa. It's a powerful cycle.

Today, Amazingtunes.com boasts music by 65,000 artists, some of whom are now signed to indie labels. Musicians, even those signed to labels, agree to give Amazing the rights to air the music for obvious reasons: they want the exposure, and it boosts their download sales.

The mix of software and DJs has turned Amazing Radio into a powerful force in emerging music of all styles -- not just in the U.K. but also in the U.S, where people can listen via the Web or mobile apps, which, incidentally, a fan built for free.

"I haven't met a good manager in the recent past that hasn't brought up Amazing Radio," said Daniel Glass, whose New York-based Glassnote Entertainment just signed a band called Daughter, which has been heavily promoted on Amazing Radio and that Glass expects to be big in the U.S.

Radio row
Amazing Radio is also the source of the "stir" I mentioned at the beginning of this article. A couple of weeks ago, Campbell got into a fight with the company that broadcasts the station, over the terms of their contract. Campbell wouldn't budge, and at midnight on May 14, Amazing Radio went dark.

Designed by a fan fighting to get Amazing Radio back on the air.
Amazing Media

Fans weren't pleased. Campbell had taken to Twitter to announce what was happening, and within an hour, the outrage began. One fan launched an online petition, another created a Facebook page, plenty others wrote to members of Parliament and major newspapers.

In the subsequent days, Amazing launched a new logo -- "Keep the Faith" -- that a fan designed unsolicited and sent to Campbell. The company also began selling T-shirts with the logo and is using the money as a prize for a Keep the Faith band competition it's holding next week.

The whole thing has turned into a major publicity event for Amazing Media, with people from indie labels around the world also voicing support. It's also once again reinforced to Campbell that he's doing something people care deeply about.

"This is not about whether we're on the radio in the U.K.," says Campbell. "It's about how musicians find an audience in the modern world."

And how music fans find new music, which in Amazing's world means a mix of crowdsourcing, knowledgeable DJs, and algorithms -- a formula that goes beyond creating playlists of known music that you share with friends on Facebook.

"It's nice to be able to be your own DJ," says Billy Mann, a top producer and music exec who has written songs for Pink and Jessica Simpson, "but there is a place for good taste-makers, especially in the sterile digital world we're living in."

Muzak with an edge
Just after Campbell launched the radio station, a store owner e-mailed him asking if he could use music from Amazing in his shop as background music. That led Campbell to develop a new part of the business, called Amazing Instore. It's also the part that's financially fueling the rest of the company, which, while still small, is on track to make $3 million this year in profits. (Spotify can't claim that).

Because most of the music on Amazing isn't bound by publishing deals, Campbell is free to license it. His only commitment is to pay the artists, who Campbell says make 120 times what they earn from having their songs streamed on Spotify, based on what some musicians who work with both Amazing and Spotify have reported to him.

Amazing launched the store business in 2010, and Campbell quickly realized how lucrative it could be. Amazing customizes the music for each client, so what you hear in a clothing store will be different than what you hear in a restaurant. In some case, clients want ads -- maybe to promote sales going on -- and Amazing creates those as well and builds them into the sound track.

A fan built Amazing's mobile apps for free.

This leads to three revenue streams: a license for the technology, the music, and the ads. Only the music fees get shared with the artist, and the terms vary. This new business helped the startup enough that Campbell changed the terms of Amazingtunes.com, so that the musicians get 100 percent of the price (Campbell also did this to compete with Bandcamp, which gives the artists 85 percent of sales).

Amazing now has deals with more than 1,000 retailers and restaurant chains across the U.K., and Campbell has been meeting with chains in the states to try to crack the U.S. market.

He's gunning hard to take on the U.S. on many fronts. He won't share details about his plans for a U.S. radio station, other than saying it will launch either in Boston, New York, San Francisco, or Los Angeles. He's brought on Ted Cohen, a pioneering digital music exec, who's been trying to cut deals with AOL, Yahoo, and others to boost the audience for emerging artists and for Amazing. So far, says Cohen, "The reaction has been unbelievably favorable."

And Campbell is in talks with big VC firms, including Kleiner Perkins Caufield & Byers and Mayfield Partners, as he seeks to raise $30 million to fund expansion in the U.S. (to get this far, he raised $8 million from private investors).

"The basic pitch is this is a bold and imaginative idea that will either fall flat or become a billion-dollar business," says Campbell, who has 26 full-time employees. "It won't be anything in the middle. We're trying to reinvent the music industry."

That will mean adding more lines of business, and becoming more global. Already, Amazing is working with festivals across the U.K, and it's starting to put on concerts that it records and broadcasts. It plans to edge into more traditional revenue streams such as publishing, merchandise, and ticketing and will likely add its own label, even releasing albums. With the goal remaining that of bringing good musicians to the world, and helping them make a living.

About the author

Paul Sloan is editor in chief of CNET News. Before joining CNET, he had been a San Francisco-based correspondent for Fortune magazine, an editor at large for Business 2.0 magazine, and a senior producer for CNN. When his fingers aren't on a keyboard, they're usually on a guitar. Email him here.
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